# TATA ENGINEERING & LOCOMOTIVE CO. LIMITED v. DIE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES & ANOTifER

- **Citation:** [1970] 3 S.C.R. 862
- **Court:** Supreme Court of India
- **Decided:** 1970-03-02
- **Case number:** Civil Appeals Nos. 2105 and 2106 of 1969
- **Bench:** J. C. Shah, K. S. Hegde, A. N. Grover, A. N. Ray, I. D. Dua
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/tata-engineering-locomotive-co-limited-v-die-assistant-commissioner-of-4976
- **Pages:** 10

## Headnote

Central Sales Tax A.ct, 1956-Trucks maaufactured In Biliar said from
producer's stockyards in other States-Thoug/J
agreement u•ith
dealers
envisaged fir1n advance orders, actual sales by allocat(o11 froni stockyards-
/I inter-state sa/es--Wltetlzer S.T.O. bound to examine each transaction or
C
declde on general basis of silnilar transactions.
The appellant carried on the business of manufacturing trucks in
Jamshedpur in the State of Bihar. It did not have any stockyard in the
State but maintained such stockyards in different States for the purpose cl{
effective distribution of vehicles among its dealers. A form of agreement
between the appellant and its dealers provided that• the company agreed
to sell and supply from its Works at Jamshedpur or from its stockyanls
D
outside the State vehicles to the dealer which would be allotted to
the
dealer by the Company at its discretion. In another provision it was laid
down that by the 15th of each month the dealer shall mail to the company
his •latements containing firm orders for purchases to be effected during
the next succeeding month.
In the course of its assessment to sale< tax for the years 1964-65 and
1965-66. the appellant claimed that as the demand for the vehicles far ex•
E
ceeded the production, no ·firm orders as envisaged in the dealership agree.
ment had in fact been received. ·The actual procedure followed by
the
appellant was that the sales office of the app<:!ant in Bombay, after taking
into account the production schedule nnd requirements in Jiffcrent States,
instructed the factory to transfer stocks o'f vehicles to the stockyards in
the various States by Stock Transfer Authorisations in which the model of
the chassis and the number of units were mentioned. The stocks availabJe
F
in the stockyards were distributed from time to time to dealers taking care
to ensure that the over-an supply to the dealers in any State \vas in propor ..
lion to the number of orders pending with the dealer on May I, 1963 or
on the basis of the off-take by the dealer during the year ending Septemher 30, 1961 as required by the Commercial Vehicl"' (Di;tribution and
Sale) Control Order, 1963.
For this purpose allotments were made to
the dealer for each month by an allocation Jetter by the sale• office. It wa;
claimed that the trans'fer of the vehicles from the factory to the various
G
stockyards was a continuous process and was not related to the require¥
ment of any particular customer; that there tvas no connection between
the Stock Transfer Authorisation and the allocation Jetter. It was the stock ..
yard inchargc \.\'ho appropriated the rt:'quired number of vehicles to the
contract of sale out of the stocks available with him. This was done after
a delivery order had been addressed by the sales office at Bomll'ay to the
;tockyard incharge for delivery of stated number of vehicles of specified
model to a particular dealer. Till such appropriation of vehicles.. it was
11
a1~·ays open to the company to allot anv vehiCfe
t<' any purchaser or to
tran!\fer the vehicles from the !itockynrd in one State to a stockyaJd in an·
other State.
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TATA LOCOMOTIVE co. v. C.C.T. (Grover, /.)
863
However, the respondent Assistant Commissioner of Commercial Taxes
levied tax under the Central sales Tax Act on all the vehicles which moved
to the stockyards in the States other than Bihar from Jamshedpur. The
appellant challenged the assessment orders in petitions filed under Article
226 but these were dismissed by the High Court. On appeal to this Court,
HELD : The order of the High Court and that df the Assistant Commissioner must be set aside.
(i) The explanation of the procedure followed by the appellant which
prima facie seemed to be business-like and plausible, together with the
proved absence of any firm -0rders, indicated that the allocation letters and
the statements furnished by the dealers did not by themselves bring about
transactions of sale within the meaning of Section 2(g) of the C

## Text

862
TATA ENGINEERING & LOCOMOTIVE CO. LIMITED
A
v.
DIE ASSISTANT COMMISSIONER OF COMMERCIAL
TAXES & ANOTifER
March 2, 1970
B
[J. C. SHAH, K. S. HEGDE, A. N. GROVER, A. N. RAY AND
I. D. DUA, JJ.]
Central Sales Tax A.ct, 1956-Trucks maaufactured In Biliar said from
producer's stockyards in other States-Thoug/J
agreement u•ith
dealers
envisaged fir1n advance orders, actual sales by allocat(o11 froni stockyards-
/I inter-state sa/es--Wltetlzer S.T.O. bound to examine each transaction or
C
declde on general basis of silnilar transactions.
The appellant carried on the business of manufacturing trucks in
Jamshedpur in the State of Bihar. It did not have any stockyard in the
State but maintained such stockyards in different States for the purpose cl{
effective distribution of vehicles among its dealers. A form of agreement
between the appellant and its dealers provided that• the company agreed
to sell and supply from its Works at Jamshedpur or from its stockyanls
D
outside the State vehicles to the dealer which would be allotted to
the
dealer by the Company at its discretion. In another provision it was laid
down that by the 15th of each month the dealer shall mail to the company
his •latements containing firm orders for purchases to be effected during
the next succeeding month.
In the course of its assessment to sale< tax for the years 1964-65 and
1965-66. the appellant claimed that as the demand for the vehicles far ex•
E
ceeded the production, no ·firm orders as envisaged in the dealership agree.
ment had in fact been received. ·The actual procedure followed by
the
appellant was that the sales office of the app<:!ant in Bombay, after taking
into account the production schedule nnd requirements in Jiffcrent States,
instructed the factory to transfer stocks o'f vehicles to the stockyards in
the various States by Stock Transfer Authorisations in which the model of
the chassis and the number of units were mentioned. The stocks availabJe
F
in the stockyards were distributed from time to time to dealers taking care
to ensure that the over-an supply to the dealers in any State \vas in propor ..
lion to the number of orders pending with the dealer on May I, 1963 or
on the basis of the off-take by the dealer during the year ending Septemher 30, 1961 as required by the Commercial Vehicl"' (Di;tribution and
Sale) Control Order, 1963.
For this purpose allotments were made to
the dealer for each month by an allocation Jetter by the sale• office. It wa;
claimed that the trans'fer of the vehicles from the factory to the various
G
stockyards was a continuous process and was not related to the require¥
ment of any particular customer; that there tvas no connection between
the Stock Transfer Authorisation and the allocation Jetter. It was the stock ..
yard inchargc \.\'ho appropriated the rt:'quired number of vehicles to the
contract of sale out of the stocks available with him. This was done after
a delivery order had been addressed by the sales office at Bomll'ay to the
;tockyard incharge for delivery of stated number of vehicles of specified
model to a particular dealer. Till such appropriation of vehicles.. it was
11
a1~·ays open to the company to allot anv vehiCfe
t<' any purchaser or to
tran!\fer the vehicles from the !itockynrd in one State to a stockyaJd in an·
other State.
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TATA LOCOMOTIVE co. v. C.C.T. (Grover, /.)
863
However, the respondent Assistant Commissioner of Commercial Taxes
levied tax under the Central sales Tax Act on all the vehicles which moved
to the stockyards in the States other than Bihar from Jamshedpur. The
appellant challenged the assessment orders in petitions filed under Article
226 but these were dismissed by the High Court. On appeal to this Court,
HELD : The order of the High Court and that df the Assistant Commissioner must be set aside.
(i) The explanation of the procedure followed by the appellant which
prima facie seemed to be business-like and plausible, together with the
proved absence of any firm -0rders, indicated that the allocation letters and
the statements furnished by the dealers did not by themselves bring about
transactions of sale within the meaning of Section 2(g) of the Central
Sales Tax Act. It appeared from the material on record that generally
the oompletion of the sales to the dealers did no: take place at Jamshedpur
and the final steps in the matter of such completion were taken at the
stockyards. E\(en on the assumption that anv orders had been. received by
the appellant they could not be regarded as .anything but mere offers in
view of the specific terms in the dealership agreement according to which
it was open to the appellant to supply or not to supply the dealer with any
vehicle in response to such orders.
There were, therefore, no firm con·
tracts which occasioned the movement df vehicles out of the State of Bihar.
[870 D-871 Bl
(ii) Another serious infirmity in the order of the Assistant Commis-.
sioner was that instead of looking into each transaction in order to find
out whether a completed contract df sale had taken place which could be
brought to tax only if tb.e movement of vehicles from Jamshedpur had
been occasioned under a
convenant or
incident of that contract, the
Assistant Commissioner made bis order on. the general basis that all transactions were of a: similar nature. The Assistant Commissioner was bound
to examine each individUal transaction and then decide whether it constituted an Inter-State 'sale exigible to tax under tbe provisions of the Act.
[8781 CJ
Tata Iron & Steel Co. Ltd. Bombay v. S. C. Sarkar & Ors. [1961]
1 S.C.R. 379, Ben Gann Nilgiri
Plantations Co. Cooncor & OtJ1ers v.
Sales Tax Officer, Special
Circle,
Ernakulam & o,.. [1964] 7 S.C.R.
706; referred to.
·
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2105
and 2106 of 1969.
Appeals from the judgment and order dated July l, 1969 of
the Patna High Court in Civil Writ Jurisdiction Cases Nos. 993
of 1968 and 72 of.1969.
'N. A. Palkhivala, Sant P. Mehta, P. C. Bhartari, and B.
Datta, for the appellant (in both the appeals).
Lal Narain Sinha, Advocate-General, State
Sarwar A Ii and U. P. Singh, for the respondents
appeals).
The Judgment o,f the Court was delivered by
of Bihar, S.
(in . both the
Grover, J; The only P<>int for detennination in these appeals.
by certificate is whether certain sales of motor vehicles manufac-
864
SUPJ.BWB COUJ.T J.BPOl.TS
[1970] 3 s.c.R..
A
tured by the appellant were inter-atate.sales and were liablo to t,ax
under the provisions of the Central Sales Tax Act 1956, hCrelllaftcr called "the Act".
The appcllant carries on the buainels of JD!Ulufacturing inter
alia Tata M~
Benz trucks and bu.sal, chassis, i:rarts and
accessories thercot at Jams!w1pur in the State of
·
• These
B
are sokho the Government of India, the State Transport,Corporations, commercial and induatrial undertalcingJ and other persons.
These appeals relate to the •88C!ISmenta made by the Auistant
Commissioner of 'Commercial Taxes, hereinafter called the "Alaiatant Commissioner", with rcprd to the assessment periods April
1, 1964 to March 31, 1965 and April I, 1965 to March 31,
c
1966. As the points are cOmm.oo to botR the appeals we shall
deal with the facts relating to the second period, namely, April l,
1965 to Match 31, 1966.
The appellant did not maintain any stockyard in the State of
Bihar but in dilfercnt States stockyards were &eing maintained
since Decembec 1964. This, it is stated, was done for the purD
pose of more ellective distributi!'lt of the vehicles particularly
among the network of dealers. These stockyards were ~rated
by the appellant's own personnel and the sales of the vchiclos, it
is claimed, were elfectCd to the dealers as well as to the other u5crs
in the different States from the stockyards. The dispute relates
only to the assessment made in respect of the vehicles which moved
1
from the manufacturing plant ill J amshedpur to the stockyards in
diflerent States in the country. The sales tax was duly paid in
accordance with the respective State laws on the sales · ellected
from the stockyards there.
The As.<i<tant Commissionei: has levied tax under the Act on
all the vehiclei which moved to the stockyards in States other tJian
f
Bihar from J ams!w1pur. Tax amounting to Its. 173 la1tha was
levied on April 1, 1966 for the period April 1, 1965 to September 30, 1965. The appellant moved the P'atna High Court
under Art. 226 of the Constitution in April 1966 challenging the
order of asSessment but petition was dismissed in llmini in April
1966. This Court was thereafter approached against the order
G
of the High Coun and special leave to appeal was granted.
The.
appeal was finally allowed in February 1967 and the High Court
was directed to entertain and decide the. petition on merits. In
November 1967 an agreed order was made by which the previous
order of assessment was set aside and fresh assessment was to be
made in accordance with law. On January 24, 1968 the appelH
!ant addressed a detailed communication giving the entire procedure which was bting followed in the matter of sales · of motor
vehicles sent to dilfercni Stales from the works at Jariishedpur.
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TATA LOCOMOTIVE co. v. c.C.T. (Grover, J.)
865
It appears that the Assistant Commissioner paid a personal visit to
the head office of the appellant at Bombay and relevant records
were shown to him there or later on according to his requisitions.
On March 13, 1968 he made ~e assessment order in which ·he
created a demand for Rs. 2,79,13,599.32 by way of sales tax
under the provisions of the Act on the vehicles which had moved
from J amshedpur to the. stockyards in the various States and had
been disposed of from there.
The appellant filed petitions under
Art. 226 of the· Constitution challenging the above order as also
the assessment on similar lines for the period April 1, 1964 to ·
March 31, 1965.
The petitions were dismissed by a
division
bench of the High Court.
The controversy throughout has. centered on the question
whether the sales subjeeted to tax were of the nature which were
covered by the provisions of the Act or whether those sales took
place in the different States where the stockyards were situate and
from where they were disposed of.
Sections 3 and 4 Qf the .Act
may be read in this connection.
· ·
"3. A sale or purchase of goods shall be deemed to
take place in the course of inter-State trade or commerce
if the sale or purchase--
(a) occasions the movement of go11ds from one State
to another; or
(b) is effected by a transfer of documents of title to
the goods during their movement from one State to
another.
Explanation I. ...................... .
Explanation II ..........•........•....•
"~. ( 1) Subject to the provisions contained in section 3; when a sale or purchase of goods is determined
in accordance with sub-section (2) to take place inside
a State such sale or purchase shall be deemed to have
taken place. outside all other States.
·
( 2) A sale or purchase of. goods shall be deemed
to take place inside a State if the goods are within the
State-:-
(a r in the case of specific or ascertained goods, at
.the time the contract of sale is made; and
(b) in the case of unascertained or future goods at
the time of their appropriation to the contract of
sale by the seller or by the buyer whether assent
866
SUPREME COURT REPORTS
[1970) 3 S.C.R.
of the other party is prior or subsequent to such
appropriaiion.
El
t.
"
xp ana ion, ..................... .
It is also necessary to refer to the definition of "sale" as given in
s. 2(g). The substance of that definition is that sale means any
transfer of property in goods by one person to another for cash or
for deferred payment or for any other valuable consideration.
As
observed in Tata Iron & Steel Co. Ltd. Bombay v. S. C. Sarkar &
Ors. ( 1 ) a transaction of sale is subject to tax under the Act on
the completion of the sale.
A mere contract of sale is not a sale
within the definition of "sale" in s. 2(g). A sale being transfer
of property becomes taxable under s. 3 (a) "if the movement of
goods from one State to another is under a covenant or incident
of the contract of sale". In Ben Gorm N ilgiri Plantarions Co.
Cooncor & Others v; Sales Tax Officer, Special Circle, Ernakulam
& Others('), the provisions of s. 5 of the Act came up for consideration and the principle settled by that decision would indisput·
ably be applicable to s. 3(a) of the Act.
It has been laid down
that the sale in the course of export predicated connection
between the sale and export, the two activities being so integrated
that the connection between the two cannot be voluntarily interrupted without a breach of the contract or the compulsion arising
from thernature of the transaction.
To occasion export there
must exist such a bond between the contract of sale and the actual
exportation that each link is inextricably connected with the one
immediately preceding it.
The principle thus admits of no
doubt, according to the decisions of this Court, that the sales to be
exigible to tax under the Act must be shown to have occasioned
the movement of the goods or articles from one State to another.
The movement must be the result of a covenant or incident of the
con tract of sale.
The points which would require determination would be
whether the transactions which have been subjected to tax were
of sale within the definition of that expression contained ins. 2{g)
and whether the movement of goods from Jamshedpur to the
stockyards of the appellant in the different States was occasioned
by any covenant or' incident of the contract of sale.
The procedure according to which dealings took place and
supply of vehicles was made was outlined in a communication
which was addres;-ed by the appellant to the Assistant Commissiop.er in February 1969.
PriorJo 1958 each dealer had to place
every month what were caUed "firm orders" for the vehicles which
the dealers wanted to purchase.
By 1958 Tata Mercedes Benz
(\) [1961] t S.C. R. 379:
[2 . [1964] 7 S.C.R. 706.
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TATA LOCOMOTIVE co. v. C.C.T. (Grover, /.)
86T
·vehicles are stated to have gained remarkable reputation for
quality.
The demand f~r exceeded th~ productio~ .. It was no
longer necessary to restnct the ptoduct1on to any lumted demand
or to depend on the number of firm orders for planning of production schedule.
Therefore about the year 1958 the appellant
stopped insisting on the firm orders from the dealers.
It was
asserted that the company's records did not contain any firm
orders after 1958. It is unnecessary to mention certain circulars
issued by the company prior to the promulgation in May 1963 by
the Government of India of the Commercial Vehicles (Distribution
and Sale) Control Order 1963 which was valid upto September
1967.
The Control Order provided for the general principles of
distribution.
Pursuant to the Conlrol Order the appellant issued
a circular dated June 14, 1963 asking the' dealers to submit the
following statements at the end of each month instead of the
weekly statements as submitted by them prior to the Control
Order : (I) list of applications registered during the month; (2)
list of retail sales during the month; (3) list of applications cancelled during the month and ( 4) stocks and sales report. The appellant explained that this was done to keep itselfinformed of the
market movement and the sale prospects of the vehicles and to
avoid any possibility of irregular allotment by the dealer. According to the appellant the extracts of the register kept by . the
dealer, could not, under any circumstances, be equated to firm
orders nor was there any relationship between the actual number
of vehicles supplied and the informati<•n contained in the extracts.
A new form of dealership agreement (Ext, I) was introduced
by the appellant after the promulgation of the Control Order.
Clause I (a) of this agreement provided that "the ~ompany agrees
to sell and supply from its "works at Jamshedpur in the State of
Bihar or from its-depots and stockyards outside the State of Bihar
to the dealer" the vehicles which shall allotted to the dealer by the
c.ompany at i\s discretion for resale in accordance with the provi--
s10ns of the agreement.
Clause 11 (b) is reproduced below :
"The dealer shall mail to the Company o~ the 15th
of e~ch month, or so so that the Company will be in
receipt thereof by the 20th of each month, his firm urder
for purchases. to b.e effected d!lring the next succeeding
month and his estimated requirements of the said vehicles for the two months following the next succeeding
month, for the said vehicles.
Jn the communication which has been referred to before sent to'
the Assistant Commissi~ner it had been emphasised that although
the above clause regardmg the firm order was included in the
d~alership agreement, in fact no finn orders were called for in
view of the Control Order.
It was maintained that during the·
868
SUPREME COURT REPORTS
(1970] 3 S.C.R.
relevant period sales were effected from the stockyards alone, the
procedure adopted being as follows : The sales office of the appellant in Bombay, after taking into account the production schedule
requirements of individual States, the Government directives and
other relevant factors instructed the factory at Jamshedpur to
transfer stocks of vehicles to the stockyards in the various States.
The instructions for transfer were given by the sales office by
Stock Transfer Authorisation in which the model of the chassis
and the number of units were mentioned. along with the name of
stockyard to which the same were to be transferred. Pursuant to
the Stock Transfer Authorisation the works prepared a Stock
Transfer Memo which indicated the quantity of the vehicles to be
transferred to the stockyard specified in the Memo. This memo
was signed by the transport contractor appointed by the appellant
for transportation of the vehicles to the stockyards.
On receipt
of the vehicles at the stockyard any deficiency in or damage to the
vehicles was noted by the stockyard incharge.
Unless the damage
to the vehicles was set right they were not appropriated to any
.contract of sale.
The stocks available in the stockyards were distributed from
time to time to dealers takillg care to ensure that the overall
supply to the dealers in any State would be in proportion to the
number of orders pending with the dealer on May l, 1963 or on
the basis of the off-take by the dealer during the year ending
September 30, 1962 as required by the Control Order. For this
purpose allotments were made to the dealer for each month by an
allocation letter by the sales office.
It is claimed that the transfer
of the vehicles from works to the various stockyards was a continuous process and was not related to the requirement of any
particular customer whether a dealer or a corporation or a private
individual.
These vehicles were transferred by way of stock to
ihe stockyards or depots from where the transactions of sale were
effected. It was pomted out that there was no connection between the Stock Transfer Authorisation and the allocation letter.
The vehicles were delivered to the dealers as and when they were
available in the stockyards irrespective of whether or not allocation for the dealers had been made or notified to them.
There
bad been many instances where the vehicles had been actually
delivered from the stockyards prior to the issue of the allocation
1etter.
The vehicles delivered to the dealer from the stockyard
were accounted for against the allocation over the period.
It was
the stockyard incharge who appropriated the required number of
vehicles to the ·contract of sale out of the stocks available with
him and out dcwn the vehicle engine and chassis number in the
•delivery challan.
This was done after a delivery order had been
:addressed by the sales office at Bombay to the stockyard in-charge
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TATA LOCOMOTIVE co. v. C.C.T. (Grover, !.)
869
for delivery of stated. number of veh~cl~s of specifi~ model to a
particular dealer.
Till .such appropr!ation of
v~hicles through
specification of the engme and chassis numbers, 1t was always
open to the company to allot any vehicle to any purchaser or to
transfer the vehicles from the stockyard in one State to a stockyard in another State.
·
Now the Assistant Commissioner has not examined each
transaction as indeed he ought to have done and has arrived at
certain conclusions which appear to be wholly erroneous and are
based on a complete misapprehension of the true position.
He
has firstly treated the allocation or alloltment letters together with
their confirmation as transactions of sale.
According to him
once the availability of vehicles for allocat10n was determined for
any particular month allocations were made to incliv1dual dealers
and Stock Authorisation Memos were issued by the sales office at
Bombay to the works at Jamshedpur.
The movement of vehicles
from the works to the stockyards was the direct result of the allocations so made.
The conclusion on this pomt was m these
words:-
"It was therefore clear that generally the movement of vehicles from works to the stockyards was not
completely disassociated from the allocation made to the
dealers.
Consequently it would (7) not be said that
the movement of vehicles from the works at Jamshedpur
was completely unrelated to contract of sale".
It was recognised that in some cases vehicles had been delivered
to some dealers in advance against the allocation made for the
following months.
The appellant further showed and this was
accepted that 15 vehicles from the Delhi stockyard
we~c transferred to Karna! stockyard. After finding that the allocation
letters together with their confirmation constituted transactions of
sale the Assistant Commissioner referred to the dealership agreement and stated that on placing of the demand by the d~aler a
complete contract came into existence.
He proceeded to regard
the statements which were required to be furnished to the dealers
in accordance with the letter dated June 14, 1963 addressed by
the appellant to them as firm orders within the meaning of the
relevant clause in the dealership agreement.
The final conclusion
of the Assistant Commissioner was that as contemplated by clause
11 (b) of the dealership agreement every one of the dealers placed
his demand or orders for supply which amounted to a contract for
the sale of the vehicles deman.ded and clause 12 of the dealership
agreement under which allocations were made by the appellant to
the dealers amounted to fulfilment of orders. The appellant had
throughout .maintained that firm orders were ·no longer placed with
it by the dealers after 1958. .It has not been found or shown that
870
SUPREME· COURT REPORTS
[1970] 3 S.C.R.
any such orders were i.n existence relating to the transactions in
dispute.
Thus on the question that transactions of sale took place
the decision of the Assistant Commissioner rested mainly on the
al.ocation letters and the statements furnished by the dealers as
requireJ by the circular of June 14, 1963.
It is somewhat unfortunate that the High Court fell into the
same error as the Assistant Cummissioner as it accepted his findings on the ground that they were on questions of fact and could
not be re-examined by the High Court.
It was said that the terms
and covenants of the contract made it clear that since the vehi-
. des were despat~hed in pursuance of orders irrespective of appropriation or specific vehicles being sent to specific dealers the
despatch and supply to the dealers must of necessity be regarded
d:> mcecrral part of a single transaction.
It is difficult to see what
. contrnits the High Court had in mind because none have been
shown to u.1 even by the learned Advocate General for the State.
He al5o relied largely .:m the findings of the Assistant Commissioner and urged that they were not open to re-examination.
The explanation of the procedure followed by the appellant
·Which prima facie seems to be business-like and pl.ausible together
with the proved absence of any firm orders lends support to the
argument pressed on its behalf that the allocation letters and the
statements furnished by the dealers did not by themselves bring
about transactions of sale within the meaning of s: 2 (g) of the
Act.
The Assistant Commissioner himself found that sometimes
•he vehicles were sent from the works at Jamshedpur even· before
an allocation letter had been issued.
It would appear from the
inaterials placed before us that generally the completion of ·the
sales to the dealers did not take place at J amshedpur and the final
steps in the matter of such completion were taken at the stockyards.
Even if the appellant took into account \he requirements
of the dealers which it naturally was expected to do when the
vehicles were moved from t}\e work;s to the stockyards it was not
necessary that the number of vehicles allocated to the dealer
should necessarily be delivered to him.
The appropriation of the
-.•ehicles \Vas done at the stockyards through specification of the
engine and the chassis number and it was open to the appellant
till then to allot any vehicle to any purchaser and to transfer the
vehicles from one stockyard to another.
Even· the Assistant
Commissioner found that on some occasian vehicles had been
moved from stockyard in one State to a stockyard in another
State. It is not possible to comprehend how in -the above situation it could be held that the movement of the vehicles from the
works to the stockyards was occasioned bv any covenant or incident of the· contract of sale.
As regard< the so called firm orders
it has already been pointed out that none have been . shown ·to
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TATA LOCOMOTIVE co. v. c.C.T. (Grover, J.)
871
have existed in respect of the relevant periods of assessment. Even
<>n the assumption that any such orders had been received by the
appellant they could not be regarded as anythmg but mere offers
in view of the specific terms in Exh. I (the dealership agreement)
according to which it. was open to the appellant to supply or not
to supply the dealer with any vehicle in response to such order.
What was, therefore, relevant was the acceptance of firm orders
occasioning the movement of vehicles out of the State of Bihar.
Another serious infinnity in the order of the Assistant Commissioner was (a matter which even the Advocate General quite
fairly had to concede) that instead of looking into each transaction in order to find out whether a completed contract of sale had
taken place which could be brought to tax only if the movement
of vehicles from Jamshedpur had been occasioned under a convenant or incident of that contract the Assistant Commissioner
based his order on mere generalities.
It has been suggested that
all the transactions were of similar nature and the appellant's
represent~tive had himself submitted that a specimen trans1ction
alone need be examined.
In our judgment this was
a wholly
wrong procedure to follow and the Assistant Commissioner, on
whom the duty lay of assessing the tax in accordance with Jaw,
was bound to examine each individual transaction and then decide
whether it constituted an inter-State sale exigibJe to tax under the
provisions of the Act.
Consequently the appeals are allowed and the order of the
High Court and that of the Assistant Commissioner is set aside in
so far as it relates to the assessments in dispute in the present
appeals.
It will be open to the Assistant Commissioner to make
a fres~ assesment ~n accord.ance. with law.
T~e appellant shall
be entttled to costs mcurred m this Court
One hearing fee.
R.K.P.S.
Appeals allowed.